NB Politicus

“Tax Equity” Proposals Call For Reducing Regressive Sales and Property Levies, Raising Rates On Wealthy

Posted in Governor, state budget, state government, Tax Policy by nbpoliticus on March 21, 2021

By John McNamara

Bills that would dramatically alter the way Connecticut taxes individuals and businesses were the subject of a marathon hearing at the Legislature’s Finance, Revenue and Bonding Committee on March 15th.  An overwhelming majority of the more than 300 individuals who testified supported tax reforms but passage will face significant hurdles in the 2021 session.

The “tax equity” proposals, co-sponsored by New Britain Democratic legislators State Senator Rick Lopes (D-6), State Rep. Manny Sanchez (D-24), State Rep. Bobby Sanchez (D-25) and State Rep. Peter Tercyak (D-26) and other lawmakers, provide tax relief to low- and moderate income households by reducing reliance on regressive sales and property taxes. High-income households would be taxed more than the current maximum of 6.99%. on their incomes to make up the difference.

A key provision contained in HB 6187 and SB 821 would adjust the state income tax on individuals earning $500,000 or more and joint filers earning $800,000. Proponents say the adjustments would make income tax rates fairer by raising the rate to 8.82% for individuals at $500,000 and joint filers at $800,000. For households earning $1 million or more the rate would rise to 12.69 percent. Governor Ned Lamont opposes any change in the current rates but a significant contingent of lawmakers. in the Democratic caucus are pushing changes to lower the overall tax burden on individuals and families below $500,000. Raising rates on wealthier households would generate $1.75 to $2 billion annually.

A coalition of unions and advocacy groups that mobilized turnout for the all day March 15thhearing assert that legislation would level the playing field and make the tax system fairer. According to a Voices for Children tax reform report “Advancing Economic Justice Through Tax Reform” issued last December, median income households with $76,106 in pre-tax income pay an effective tax rate of nearly 14% while the top one percent of tax filers with an average income of $3,092,389 have an effective tax rate of 6.5%. The effective tax rate takes into account the total tax burden of property, sales and income taxes on taxpayers. It means that a nurse or salesperson earning less than $100,000 now pays double the taxes comparably to wealthy individuals whose burden has been reduced further in recent years as the result of the Trump tax cuts for the “one percent” with incomes in the millions and billions.

A 2% statewide property tax “on the portion of the market value of homes in excess of $1.5 million” also dubbed the “mansion tax” drew opposition at the legislative hearing from worried homeowners, most of whom would not be effected by the levy on only the highest value residences. The tax on “mansions” with assessed values exceeding $1 million would raise $663 million. The same “mansion” tax is proposed in SB 171 with State Senate President Martin Looney sponsoring the stand alone bill.

Tax relief for the working class is part of the comprehensive legislation with an expansion of the Earned Income Tax Credit (EITC) to 50% of the federal tax credit at an estimated cost of $155 million. The Senate version of the bill also includes a state child tax credit similar to federal Rescue Act one designed to reduce child poverty. For property tax relief the tax credit would double to $400 on homes and motor vehicles at a cost of $63 million.  For COVID 19 relief a direct payment of $500 would be sent to individuals who have faced hardships and unemployment over the last year.

The Finance committee is also considering other provisions of the tax equity legislation that would generally lower the tax burden on working and middle income residents:

  • A 10% tax on digital ads placed in Connecticut by companies with digital ad revenue of more than $10 billion (Google, Facebook, and Amazon) generating $140 million annually.
  • Lowering the estate tax exemption to $2 million, eliminate the payment cap, and enact estate tax rates similar to the rates in effect before the Great Recession. This would generate approximately $162 million annually.
  • Increasing the base corporation business tax rate to 11.5% for corporations with gross income of $100 million or greater and extend and increase the current surtax to 20%. This would generate approximately $250-300 million annually.
  • Imposing a surtax of 5% on capital gains, dividends, and taxable interest for individuals with income in excess of $500,000 per year ($800,000 for joint filers). This would generate approximately $850 million annually.

Proponents of the legislation face a considerable amount of misinformation about impacts on working and middle income households whose effective tax rates would stand to be reduced by passage.  Any tax adjustment in the direction of equity always elicits arguments that the big taxpayers that the state depends on would flee like snowbirds to Florida and that businesses would go offshore if they haven’t already to avoid paying more taxes. Standing in the way of any change and buying into those arguments is Governor Lamont who made a “no new taxes” pledge to the Connecticut Business and Industry Association last week.

It remains to be seen how much the Democratic caucus and its leaders can move Lamont to support one or more of the provisions intended to reduce regressive taxes and make Connecticut’s tax system more equitable. Some are hopeful that Lamont will take a page from President Biden who is now calling for a higher rate on wealthy individuals making over $400,000 for public investments like infrastructure and to address a spiraling federal deficit from the Trump years. 

For now the Finance, Revenue and Bonding Committee, co-chaired by Hartford State Senator John Fonfara and Shoreline State Rep. Sean Scanlon, has its hands full in sorting out what provisions will move to a full vote in the General Assembly this session.

 

Stewart Seeks To Exclude BOE, Common Council From Approving Use Of School Construction Money

Posted in Bonding, City Hall, public education, school board, School Construction by nbpoliticus on March 8, 2021

By John McNamara

The Stewart Administration, blocked in recent months by a bipartisan Board of Education (BOE) and city ordinance from filling a political patronage job on a new school construction project, will seek to remove  Common Council and BOE authority on school construction spending handing the final say over to the seven-member School Building Committee (SBC) appointed by the Mayor.

A resolution filed by the Republican caucus Majority Leader Daniel Salerno and Alderwoman Sharon Beloin-Saavedra at the March 10th Council meeting would alter the membership of the SBC, by dropping Common Council appointments.  It would further cede approval to “engage, select, and enter into or continue all necessary contracts with contractors, architects, landscape architects, or engineers, and within the limits of the appropriations made by the council, this committee shall engage and fix the salary of one or more construction representatives ” to the School Building Committee. The existing ordinance requires  approval by the BOE and Common Council.

CITY HALL WATCH

The hiring of a construction representative for the Chamberlain Elementary School renovation project and re-roofing projects at Pulaski and Slade Middle Schools sparked controversy last year when the SBC selected Ray Moore, the former Schools’ facilities director, to be a construction representative at a six-figure salary shortly after he retired from his job at the schools.  Former NBHS Principal and retired School Administrator Paul Salina, who is the Stewart appointed Director of Support Services at City Hall, reportedly pushed hard for Moore, his former colleague, to get the lucrative construction representative’s position. 

BOE members, however, objected to the Moore hiring saying a newly-hired Facilities Director in the School District could handle oversight of the Chamberlain renovation without the added costs. “We try to save as much as city-wide taxpayer money as possible.” BOE Member Violette Jimenez Sims told the New Britain Herald’s Catherine Shen in a November 24th story. “For me, I would rather spend the money that would directly impact the children that they can use forever and ever and not spending it on a redundant service.” 

The Moore hire was subsequently set aside after BOE Attorney Patrick McHale asserted that state statutes and the ordinance gave the BOE the right of approval of the construction manager who answers to the SBC.

For all its clout in allocating and contracting tens of millions of dollars for school construction the School Building Committee is a relatively obscure municipal government committee.  It’s not easily found on the city website’s link to boards and commissions.   Its Chairperson, Frances Wolski, has been a member for multiple two-year terms during the Stewart administrations. The committee has seven members but two seats are vacant as of February.   The Committee’s most prominent member in recent years has been former Mayor Timothy Stewart, a position of influence he held during his daughter’s first two terms until his mysogynistic social media rants ended his tenure on the committee and as head of the Chamber of Commerce.

Last year the Council approved $57 million for the Chamberlain renovation and re-roofing projects contingent on state reimbursements.  State Representative Bobby Sanchez (D-25), the Chair of the Legislature’s Education Committee, has successfully worked to get a 95% reimbursement from the state for a renovated Chamberlain School in the east end and roof upgrades to two middle schools.

The proposed School Building Committee resolution is certain to raise new concerns by Common Council Democrats over the propriety of removing Council and BOE checks and balances on school construction.  School construction projects involve millions of dollars in state bond and local funds that need to be allocated with competitive bidding and full transparency, which is what the existing ordinance ensures.  Ceding all power now to the Mayor’s office and the Mayoral appointed SBC creates a process that will eliminate oversight by elected BOE and Council members.

Related Story:  School Building Committee Pick For Architect of Smalley Academy Renovation Has Its Share of Troubles.

Related Story from New Britain Herald  Construction Bill Will Fund Three New Britain School Projects

 

 

 

 

The National “Fight For 15” Will Continue After COVID Relief Act Passage

Posted in economy, labor, living wage, minimum wage by nbpoliticus on March 4, 2021

Connecticut and other states are on a path to $15 an hour but the federal minimum wage has not increased since 2009 when it went from $6.55 to $7.25 per hour, an amount that keeps the working poor in poverty or juggling multiple jobs to survive.

By Eshawney Gaston | March 3, 2021

I’m one of America’s millions of essential workers. We’re working in your children’s schools, at your grocery stores, and at drive-through windows. We’re cleaning your homes.

We care for your parents, children, and homes. We should make enough to care for our own, too.

And we’re struggling so hard to make ends meet.

Congress is debating whether to raise the minimum wage to $15 an hour. Experts say this would raise wages for 32 million workers like me.

Supporters had hoped to pass the increase as part of the COVID-19 relief package, but an obscure parliamentary rule says they can’t. Now supporters in Congress will have to decide how hard they’ll fight for us.

I want to share a bit about what it’s like to work for less than a living wage — especially during this pandemic.

In my last job, I sold vacuums door to door. My coworkers and I had to go into strangers’ houses to demonstrate the equipment. But our company didn’t provide Personal Protective Equipment (PPE), and it didn’t require employees or clients to socially distance or wear masks.

Eventually, I caught COVID-19. Instead of supporting me, my manager repeatedly questioned me for quarantining. I didn’t want to risk my life for a low-wage job with no benefits, so I left.

Now I work two low-wage jobs, but neither has benefits. The safety precautions are a little better, but as a home care worker, I’m caring for patients who may or may not wear masks.

It’s especially stressful because I live with my mom, who’s in several high-risk categories. My two jobs aren’t enough to afford an apartment with utilities, furniture, and other expenses, so we’re living in a hotel.

The pandemic made this harder, but the truth is that it’s always been hard — I’m 23 and I’ve already had too many jobs to count. I keep changing jobs to escape poverty wages, harassment, discrimination, exploitation, danger, and a lack of health care. Wherever I go, it doesn’t seem to get better.

This isn’t right. And that’s why I’ve learned to fight back.

When I was working at McDonald’s for $7.25 an hour a few years ago, a co-worker told me she was going to a rally for the Fight for $15 campaign. I asked to go along. It was an amazing experience. We were all there for each other, working for structural change so that we don’t have to live this way. So no one does.

I started dedicating my life to achieving a living wage, union rights, and health care for all. And right now, we’re so close to $15.

Some lawmakers don’t think essential workers like me need a livable wage. I want to tell them they’re wrong. We’re the ones taking care of your ailing parents, teaching your kids, and putting food on your table.

My mom and I deserve a place to call our own. My fellow low-wage workers deserve to be able to buy good food, get quality healthcare, and securely house their families in exchange for their hard and often dangerous work.

Even before the pandemic, 140 million Americans were poor or low-income. Now the economy is down 10 million jobs since the pandemic hit, and at least 8 million more of us are living in poverty.

I don’t want to have to struggle so hard to survive. I don’t want that for anyone. We’ll need more than a living wage to make ends meet for all of us — we’ll need stronger unions and better health care, too — but fair pay for hard work would be a great place to start.

The minimum wage must be raised to $15 an hour. Join the Fight for $15 where you live, and call on your representatives to make it happen. Together we can make this a reality.

Thanks to http://otherwords.org for providing this commentary